First International

Shipping will emerge victorious

21-10-2008

FOR SHIPPING the long-term effects of the credit crunch may be positive, delegates at the 1st World Shipping Congress, held in Athens on 9 October and sponsored by the Financial Times, were told.

 

Robert Wright, the newspaper’s transport correspondent, declared: “We are in for difficult times and we have to face up.”

 

However, Duncan Dunn, senior director of Simpson, Spence & Young, commented: “I don’t think things are as bad as we think.” He believes that the crisis offers shipping “great opportunities” to reassess and adopt a much needed conservative approach to business. What shipping really requires in these difficult times, he added, is “clear thought”.

 

With the perspective of a member of an older generation that remembers past calamities, president of the International Chamber of Shipping, Spyros Polemis said: “We’ve been through many crises,” from which, he reminded attendees, shipping emerged victorious – as it will from the current crisis was the implication.

 

Attendees were a mixed bag of optimists and pessimists, although both camps shared the opinion that the situation is undoubtedly bleak but that the crisis will eventually be overcome. What they disagreed on was when.

 

“Ship finance will start growing from next year,” Petrofin’s Ted Petropoulos predicted, adding that the crisis will most likely be overcome in 18 months.

 

Paul Slater of First International said four years is more realistic. He pointed out that what shipping requires is “breathing space,” which can only be brought about by “going away from newbuilds” (see Fairplay 2 October ). Petropoulos agreed: “It is likely that more cancellations will be a positive factor in the long run,” he said.

 

“Repayment terms will tighten, the cost of finance will increase, and covenants will be more stringent. Some banks will vanish while others will exit shipping,” Stealthgas CFO Andrew Simmons warned. “But for well-structured businesses,” he said, “finance will be available.” Which bank is most likely to provide that finance, he did not say.

 

Greek prudence

During the conference, Greek shipping was praised for the prudence it has shown in recent years as far as obtaining finance is concerned. Indeed, 77% of the Greek orderbook has financing already secured, according to Petropoulos.

 

It is a safe bet that this prudence will mean that shipping in Greece will find it easier to deal with what the Greek shipping minister Anastasis Papaligouras referred to in his opening speech as a “fluid globalised financial environment”.

 

But a Greek shipowner defining himself as “old school” told Fairplay that “edginess” is the prevalent feeling among the younger generation of Greek shipowners whose companies are listed in the London and New York exchanges and are therefore prey to market volatility.

Source: Fairtrade online, October 2008.

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